Small Mid Caps Thailand – Update

I love investing in small & mid cap stocks (SMC’s) in Thailand. I was first exposed to researching them back in 2006 when the fund I was with realised that none of us were very good traders of large caps, and that we were far better researchers of companies and industries. Since then I’ve never looked back from having them as a core portion of my portfolios. Below we show that SMC’s achieve a far higher annual return versus the market and large caps.

Granted some may say that SMC’s are far riskier to invest in, but I completely digress, I’ve always found small/mid cap companies to be far easier to understand, far easier to do valuations on, and far easier to meet with management.

Below I show two charts demonstrating why we just prefer SMC’s over the bog standard large cap’s. They clearly demonstrate that SMC’s are far more attractive as investments if one is willing to take the time and effort to look for the opportunities that exist in the market.

Graph 1 – Here we defined which companies were SMCs and tracked their performance over the past 11 years.

Graph 2 – Here we defined annually which companies were SMC’s and created an index that we tracked annually for the past 11 years.

Calculations notes:

We used Morningstar’s definition that Large Caps represent 80% of an index, Mid Caps 15% and Small Caps the remaining %age.

Any companies that went into or became rehabilitation/non-performing were automatically assigned a value of THB 0 as their market cap